Housing starts see steep drop in January

Housing starts came in lower than estimates in the first month of the year, as the cold winter dampened activity. New construction starts fell to a seasonally adjusted annual rate of 1.331 million units, down 14.8% month over month, according to a report released Friday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD).

Housing starts in January also fell by 0.7% on an annual basis. Single-family housing starts dropped 4.7% from December to a rate of 1.004 million units. However, they were 22% higher than a year ago, surpassing the 1 million mark for the third straight month. Multifamily starts fell to a rate of 314,000.

The rate at which building permits were issued in January was down 1.5% monthly but up 8.6% annually to a rate of 1.470 million. Notably, the number of single-family authorizations was up 1.6% month over month in January to a rate of 1.015 million units, the highest level since May 2022. Meanwhile, multifamily authorizations were down month over month to a rate of 405,000 units.

Housing completions also sunk compared to December, falling 8.1% to 1.416 million units. Single‐family housing completions fell by 16.3% between December and January, at a rate of 857,000. Meanwhile, multifamily completions came in at a rate of 538,000 in January. 

The regions that suffered the most winter storms posted the biggest declines in January. New starts in the Northeast and the Midwest fell 20.6% and 30% month over month, respectively. 

Housing inventory remained low in January and new homes still accounted for about 30% of all homes available for sale.

“This spring, there will be more new listings coming onto the market though buyers will still outnumber sellers and there will still be robust demand for new homes,” Bright MLS Chief Economist Lisa Sturtevant said in a statement.  

Despite the drop in January, homebuilders are feeling optimistic about the season to come. In fact, homebuilder confidence shot up to a five-month high in February, according to the National Association of Home Builders’ most recent survey.